Gov. Bobby Jindal's privatization initiatives run into trouble in Legislature

Brett Duke, The Times-Picayune archiveGov. Bobby Jindal's privatization efforts are no surprise to legislators, as it's an issue that he campaigned on and has emphasized for years. He was photographed addressing the combined House and Senate on March 29.

Two of the administration's key privatization initiatives ran into trouble last week, as the House passed legislation that would give the health-care and budget committees new oversight over the outsourcing of state-run psychiatric services, and a budget committee tried to put the brakes on an effort to turn over much of the state's legal claims management to a Mandeville company.

Another challenge to the administration's outsourcing authority is scheduled for debate Monday in the House Appropriations Committee, when lawmakers will decide whether the Legislature should have direct oversight of 5,000 state contracts for professional services and other consultants hired by various agencies. House Bill 1316 by Rep. Kirk Talbot, R-River Ridge, would create a six-member House-Senate subcommittee to review all consulting contracts and reject the ones it doesn't like.

While it remains unlikely that the Legislature will succeed in blocking any major privatization effort, the pushback shows that lawmakers' philosophical support for smaller government sometimes withers in the face of parochial concerns about the economic effects of downsizing on communities that depend on state jobs.

"I was sent down here to represent the people that sent me here," Rep. Tom McVea, R-St. Francisville, told his House colleagues Thursday. "I do not represent (the Department of Health and Hospitals), Division of Administration, or any people like that. We work with them. But I can tell ya -- always keep in mind to represent the folks that sent you here."

Other legislators have questioned whether eliminating state jobs -- even if many are replaced with private-sector jobs -- will end up costing the state money as the newly unemployed seek public assistance. "Have we talked about the possibility that with this transition and laying people off and losing jobs that we may have higher unemployment costs that the state will have to pay if we continue down this road of privatization?" asked Sen. Sharon Weston Broome, D-Baton Rouge, during a recent budget hearing.

Commissioner of Administration Angele Davis, Jindal's chief budget architect, said lawmakers are being inconsistent by balking at some of the things they've been asking the administration to do to cope with Louisiana's multiyear budget shortfalls.

"I'm surprised because this is exactly on one hand what they're telling us they want us to do, and we're serving it up to them," Davis said. "And particularly in light of the magnitude of the challenges that we're being faced with, this is part of the solution."

McVea is a co-sponsor of House Bill 1443 by Rep. John Bel Edwards, D-Amite, which is aimed at slowing down Jindal's efforts to eliminate 283 state jobs at state-run mental hospitals in Jackson and Pineville while turning over 135 beds to private operators.

The bill, which passed 64-27 despite administration objections, would require the executive branch to get prior authorization from the Legislature for contracts lasting longer than three years if they affect the state's mental hospitals.

Health and Hospitals Secretary Alan Levine said Edwards' bill won't affect the current privatization efforts in Jackson, as the privatization contracts under consideration there would be for less than three years. But it could affect the long-term plans for turning over mental-health services in Pineville to a private contractor.

He said the privatization efforts should be no surprise to legislators, as it's an issue that Jindal campaigned on and has emphasized for years. "Certainly there are forces that want to keep things they way they are. We understand that," Levine said. "The governor obviously gets a vote in this process too. His vote comes last."

Another privatization program receiving less-than-smooth sailing is the administration's plan to assign much of the state's legal claims management to a Mandeville company.

Over a period of three years and four months, the workload now handled by the state's Office of Risk Management would shift to F.A. Richard and Associates, a 32-year-old firm that recently won a competitive bid for the work. The five-year contract for $68.1 million would begin July 1 if the Legislature's joint budget committee signs off.

But the approval of the contract was delayed after members of the budget committee pressed state officials for details about the projected cost savings and how state workers would be affected by the change.

The risk management agency oversees a state self-insurance program that handles a variety of claims stemming from state workers' compensation cases, property damage, medical malpractice and road hazards. The savings to the state is estimated at $20 million over five years, although company managers say that is a conservative figure.

While senior managers at the risk management office would remain on the job, about 85 state workers would be let go over time and replaced by private hires.